200 Public Square office tower in downtown Cleveland sold

200 Public Square

The 200 Public Square office tower, downtown Cleveland's third-tallest building, changed hands last week at an undisclosed price. The new ownership group is a venture led by DRA Advisors, a New York-based investment advisory firm. Local developer-investor Scott Wolstein has a stake.
(Chuck Crow/The Plain Dealer)

Citing confidentiality requirements, Harbor Group wouldn't divulge the price or comment on rumors that the 45-story tower and 757-space garage might have fetched close to $190 million.

"This was a very large transaction for a market like Cleveland," said T. Richard Litton, Jr., Harbor Group's president. "We certainly had multiple parties that did due diligence and bid the asset at levels that we were pleased with."

Wolstein couldn't be reached for comment. Robert Hyman, an asset manager at DRA, did not respond to an interview request.

Built in 1985 as a headquarters for the Standard Oil Co. but quickly renamed - and often still called - the BP Tower, 200 Public Square emptied out and transformed into a multi-tenant property as BP first cut jobs and later moved its North American headquarters to Chicago.

Harbor Group bought the building in 2005, paying just over $141 million. At the time, the offices were roughly 80 percent leased but only 60 percent full, real estate brokers said. Now the space is 87 percent occupied, home to tenants including Huntington Bank, the Benesch law firm and New York Life Insurance Co.

Litton acknowledged that Harbor Group, which typically sells office buildings after five to seven years of ownership, held onto 200 Public Square much longer than expected due to the 2008 financial crisis and Cleveland's slow recovery. The company's past sale explorations didn't yield a buyer at the right price.

Recent lease deals at the building, combined with downtown Cleveland's revival, made the property more appealing to buyers this time around, Litton said.

Plus, investors who can no longer find the financial returns they want in larger cities have become more willing to consider secondary markets like Cleveland, said Rob Roe, managing director of the JLL real estate brokerage here.

JLL marketed 200 Public Square for sale. Roe estimated that close to 70 percent of the potential buyers hailed from out of town. He expects DRA and Wolstein to spruce up the tower, with more modern amenities designed to attract not only tenants but also talent.

"In the past, it would have been called loitering," he said, pointing to broader efforts by landlords to encourage people to linger in office-building lobbies and other shared spaces. "Now, that's where you get the energy."

An investment advisor, DRA manages $10 billion in assets for itself and its clients. In Ohio, the firm's funds own industrial properties and shopping centers, including Cedar Center North in South Euclid and Cedar Center South in University Heights.

At more than 1.2 million square feet, 200 Public Square is by far the firm's largest single investment in the state and its only office building.